I think you handled this well. I think if he comes back again without agreeing, you need to ask for the name of his arborist. Both the one that took down the tree, plus the one that appraised the tree(if they were different). It's likely that if he's willing to be a #### about the process before this that he's also willing to lie about an appraisal. You also need testimony from the tree cutters about why they took down that tree especially if it ends up in court.
Also, you're a better person than I am. If I had an email where he stated he owed me at least $2000 according to his own estimates and his first offer was less than $500 worth of trees I would've gone off on him for being a huge ######. Of course I don't really care if my neighbors like me so YMMV.
As to the first part, yes, that will likely be next. As mentioned above, I don't think there will be much more negotiation. Our last email to him is obvious that we are serious about getting this resolved properly.
At this point, if he agrees to planting one of those trees, I'll probably go along with it and call it a day. While it doesn't make us whole, it gets us close to there. But I wasn't going to back down from our initial request just because he decided to start low and come up to where he should have started at a minimum.
I also have a written record of him admitting fault and getting appraisals. This was important and part of why we kept it to emails as well.
The tone of the email was not hostile but it was firm.
Someone asked if we've reviewed this with a non-internet person. The answer is somewhat, but not to the extent that I'm 100% sure I will get what I'm asking for. I am, confident, though, that he's in the wrong, and based on everything I've otherwise learned, I could get that information after officially meeting with an attorney that specializes in this if I need to.
Based on his last email, even if things turn further south and then he tries to rescind what he offered, I feel quite comfortable knowing I can get that back at a minimum. So, I'll be interested to see what his response will be because it will let me know how accurate my assessment of the situation is. I hope I've gotten it right.
I'm pretty sure this is where it will get serious.